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Chapter 5 Section 3: Changes in Supply

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by

Lani Tieu

on 15 January 2015

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Transcript of Chapter 5 Section 3: Changes in Supply

Government's Influence on Supply
The government has the power to affect the supplies of many goods.

By raising or lowering the cost of the goods.

The government can encourage or discourage an entrepreneur or an industry within the country or abroad.
Future Expectations of Prices
Future expectations greatly affect supply
Number of Suppliers
If more suppliers enter a market to produce a certain good, the market supply of the good will rise, and the supply curve will shift to the right

On the other hand if the suppliers stop producing the good and leave the market, the supply will decline

Their is a positive relationship between the number of suppliers in a market and the market supply of the good
Key Terms:
Subsidy
:
A government payment that supports a business or market

Excise Tax
:
A tax on the production or sale of a good

Regulation
:
Government intervention in a market that affects the production of a good
Input Costs
Chapter 5 Section 3: Changes in Supply
Subsidies
Decrease in supply:
If soy beans will drop in the future the farmers will keep most of their stock until they go up again reducing total supply of beans

Increase in supply:
If soy beans raise in price in the future more beans will be sold increasing the overall supply of beans
One method used by governments to affect supply is to give subsides to the producers of a good.

Subsidy is a government payment that supports a business or market.

Governments in developing countries often subsidize manufacturers to protect young, growing industries from strong foreign competition.
How inflation affects expectations:
If an inflation is expected supply will become abundant while money looses its value causing supply to cost more and less of it actually being sold
Supply in the Global Economy
The supplies of imported goods are affected by
changes in other countries
.
Total supply = imports + domestically produced products
Examples
U.S. imports
carpets
from
India
.
U.S. imports
telephones
from
Japan
.
wages of workers
supply of carpets
cost to produce
supply of telephones
(
due to new technology
)
Excise Taxes
An excise tax is
a tax on the production or sale of a good
.

It can
reduce the supply
of some goods.

It
increases production costs
by adding an extra cost for each unit sold.

They are built into the prices of goods (consumers don't realize that they're paying for them).

Sometimes used to discourage the sale of goods that the govt. thinks are harmful
(ex: cigarettes & alcohol)

It
causes the supply of a good to decrease
at all price levels.
Any change in the cost of an input will affect supply.

The raw materials, machinery, or labor needed to produce a good or service.
By: Nhi Nguyen , Lani Tieu, Arvin Castle, Valeria Gonzalez, Jose Gurrola, and Lesly
Input costs
$ugar
Supply
Technology
Advances in technology = less need for human labor.

Technological innovations, such as the computer, enable workers to be more productive.

Helps businesses to increase the supply of their services, such as processing insurance claims or selling airline tickets.
Full transcript